US may lose WTO auto case with China

The United States of America has filed Thursday a complaint with the World Trade Organization (WTO), accusing China of imposing unfair duties on its automobile exports.

The announcement came as President Barack Obama hit the campaign trail in the battleground state of Ohio, where automakers have been affected by the tariffs imposed in December.

But an expert told CNBC’s “Cash Flow” he expects the U.S. will lose the case.

“Very likely the U.S. will lose, in my opinion, when it goes to the WTO,” said Jagdish Bhagwati, Former External Adviser to the WTO and now a professor at Columbia University.

“Obama forgets for example that General Motors has turned around not because of the bailout but because General Motors is investing heavily in the Chinese market. We need these markets,” he said.

The U.S. case filed Thursday is the latest in a string of disputes between Beijing and Washington over access to each other’s markets for goods ranging from poultry to steel pipes. In March, Mr. Obama said the U.S. was pressing the WTO to force the export giant to ease its hold on rare-earth minerals critical to high-tech manufacturing.

“American auto workers and manufacturers deserve a level playing field, and we are taking every step necessary to stand up for them,” U.S. Trade Representative Ron Kirk said in a statement.

A senior Obama administration official said China is unfairly imposing $3.3 billion of antidumping and countervailing duties on U.S. automobile exports covering some 80% of U.S. exports to China.

China’s government said Friday it will “properly handle” a U.S. complaint to the World Trade Organization about its anti-dumping duties on auto imports and doesn’t want the latest in a string of trade disputes to harm relations.

“It is normal for frictions to occur,” said a foreign ministry spokesman, Liu Weimin, at a regular briefing. “What is important is to properly handle it and not to let it impede friendly relations.”

Under WTO rules, the U.S. can request a dispute settlement panel if consultations don’t produce results within 60 days,.

China imposed the duties on US-made vehicles in response to the Obama administration’s decision place a tariff on imports of Chinese-made automobile tires in late 2009.

The US imposed a 35% duty on Chinese tires in an effort to cut import quantities and boost job creation at US tire makers like Goodyear Tire & Rubber Co.